Post-MBA Corporate Development --> Fundamental/Value HF ... good path to try?
Assume no CD experience pre-MBA.
My thoughts are that working in CD requires making long-term investments (albeit strategic/operational, as opposed to financial), so it may force one to think like a long-term owner, a la value-oriented investing. If possible, how long should it take in CD before making the hop?
First, I'm not in industry, so I could be completely off here, but here are some thoughts anyways:
I don't think the jump from CD -> HF will be easy. HF is all about the markets (from what I understand) and CD is about M&A. Yes, HFs hire former IB analysts, but that's usually after 2 years as an analyst so the HFs know they're workhorses. CD is usually considered an exit op, just like HF is.
I should also mention, your thought process here is solid and if I hadn't been reading these boards for a long time I'd think you could do it. The thing is, most of the "traditional" exit ops (ie- HF, PE, CorpDev, etc) want you to be on a track by the my time you've completed your MBA. So while the HFs may take IB analysts after 2 years, they probably wouldn't be as interested in an associate after 2 years.
If you want to move into a HF, your best options are going to be ER, S&T (for the trading side), or asset management of some sort. I doubt it's impossible to make the jump, and I doubt it's never been done before either. That said, it's a very non-traditional route. That further you stray from the traditional route, the more difficult it will be. Who knows though, you might get lucky and find a guy that appreciates the skillset.
Once again, I feel the need to reiterate that I'm completely pulling this out of my ass. I'd wait for someone else's input and if you don't get anything in a couple days, post it to the HF forum.
Also, take a look at this thread: http://www.wallstreetoasis.com/forums/corp-dev-corp-strat-salaries-and-…
PE seems doable after ~10 years, jumping to IB/consulting seems possible too. Note that nobody mentioned anything markets-related.
I interviewed with a L/S hedge fund in London and those guys were looking for independent thinkers with a company valuation background. I think they would have been pretty open for CD backgrounds too, providing you were smart. Could be more difficult in the US, not sure.
I don't get this entire track philosophy and herding mentality that is so pronounced in junior finance careers in the US; one could see it actually just supporting all the detrimental short-termist groupthink bs that is going on and got us to Lehman & Co in the first place.
Thanks for the input so far ... anyone else care to chime in?
Very difficult, I think. You have a better shot at the investments world if you aim for HF/AM jobs during the MBA program.
Assuming you go to a decent MBA program and have a few decent investment write-ups that you can talk about - you should be fine.
If you go into corp dev and work for a great capital allocator, you'll learn a way of thinking that is similar to how many long-term investors think. See Thorndike's book The Outsiders for case studies on CEOs that earned this superlative.
But if you go into corp dev at a company with questionable capital investment decisions, you're learning how to waste capital. Other than as a lesson in what to avoid, that's not a helpful background for a value investor.
Summary of my 2 cents: it depends completely on WHO you're working for. The right person and it could be a great experience. Otherwise, what are you learning?
It really depends on the firm and role. I know CD guys that are strictly M&A-focused, looking for acquisitions or evaluating divestitures. I also know some that are in more strategic roles where the requirements are more capital markets focused.
For instance, a buddy works at a major airline that hired some BB Capital Markets MD to co-manage its CD group. His subgroup is responsible for evaluating the stock of the company vs. its peers, analyzing trends and margins, comparing bond yields and ratings, assessing hedging results, etc.
I would assume if you are more in the latter, you may have a better chance at a L/S HF than if you were in the former role.
This is exactly what I was getting at ... with the right firm, you would be learning how to think critically about investments. What kinds of industries or companies do you think would be good examples of this? My impression is that it would be hard to tell because some acquisitive companies do tons of small deals that don't get reported in the SEC filings (think Cisco, Sysco).
Also, assume I did go to work for one of these great capital allocator firms, how do you think that would set me up for future L/S HF investing vs. sell-side ER ? (obviously the long term focus would be better than the quarterly obsession of sell-side ER, but I am talking more about practical exit opps)
Thanks
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